Overview: The output of underwriting is a risk classification that determines the premium the applicant will pay — and, for substandard risks, whether additional modifications apply.

Preferred and Preferred Plus

The top risk tiers are reserved for applicants who demonstrate excellent health, safe lifestyles, and clean medical histories. Typical characteristics of a Preferred Plus (also called Super Preferred) applicant include ideal BMI, no tobacco use for at least three to five years, blood pressure below 130/80 without medication, cholesterol ratios within optimal ranges, no significant personal or family medical history, and no hazardous hobbies or high-risk driving history. Preferred applicants meet slightly relaxed thresholds — perhaps controlled blood pressure on one medication, or a slightly elevated cholesterol ratio — but still represent above-average health. These classifications earn the lowest available premium rates.

Standard

The Standard classification covers applicants with average health and normal life expectancy. A standard applicant might have a managed chronic condition like mild hypertension or high cholesterol, a family history of heart disease, a BMI that is modestly elevated, or minor driving violations. They don't qualify for preferred discounts, but they're also not penalized with extra charges. This is the most common classification.

Substandard (Table Ratings and Flat Extras)

When an applicant's risk profile exceeds the standard range, the underwriter doesn't automatically decline the application — instead, they price the additional risk. The two most common methods are:

Table ratings use a letter or number scale (Table A through P, or 1 through 16). Each table step represents approximately a 25% increase over the standard premium. So a Table A or Table 1 rating means 125% of standard; Table D or Table 4 means 200% of standard.

Flat extra premiums add a fixed dollar amount per $1,000 of coverage annually — for example, $5.00 per $1,000 — rather than a percentage. Flat extras are common for occupational hazards or specific recreational risks where the excess mortality is situational rather than tied to overall health.

A third method, used less frequently, is rate-up in age: treating the applicant as if they were older for premium calculation purposes.

Beyond premium adjustments, underwriters may also modify coverage through exclusion riders (removing coverage for a specific condition or activity) or by limiting the face amount or policy term.

Worked Example: Substandard Rating Calculation

Consider Maria, age 47, applying for a $500,000 20-year term policy. She has well-controlled Type 2 diabetes with mild complications. The underwriter assigns her a Table C (Table 3) rating.

Standard annual premium for her age and coverage: $1,800
Table C surcharge: +75% (3 × 25%)
Surcharge amount: $1,800 × 0.75 = $1,350
Rated annual premium: $1,800 + $1,350 = $3,150 per year
Monthly: $262.50

If instead the insurer assessed a flat extra of $3.00 per $1,000 for her condition:

Flat extra: (500,000 ÷ 1,000) × $3.00 = $1,500 per year additional
Total: $1,800 + $1,500 = $3,300 per year

The insurer chooses whichever method more accurately reflects the nature of the risk.

FAQ

Can a substandard rating ever be removed later?

Yes. Many insurers allow policyholders to request a re-evaluation after a period of demonstrated improvement — losing significant weight, successfully managing blood pressure for several years, stopping tobacco use, or quitting a hazardous hobby. The insurer may reduce or eliminate the surcharge if updated medical evidence supports it.

Is declined coverage permanent?

Not necessarily. A declination from one insurer doesn't mean a permanent bar from life insurance. Underwriting guidelines vary by company, some carriers specialize in impaired-risk cases, and health conditions sometimes improve over time. An applicant declined for poorly controlled diabetes might qualify with the same insurer once the condition is well-managed.